What penalties apply for failure to keep records and incorrect returns by Employment Intermediaries?

This is a freeview 'At a glance' guide to penalties for Employment Intermediaries.

At a glance

Penalties for failure to keep records

From 6 April 2014, Employment intermediaries and employment agencies are subject to new measures (included in section 716B ITEPA 2003) that are designed to prevent disguised self-employment in agency workers. These include new requirements for quarterly reporting to HMRC and record keeping.

HMRC has introduced a new system of penalties which apply to these requirements. The penalties will apply to the following conditions:

  • Failure to make the required return
  • Making an incorrect return.

The penalties consist of an initial fixed penalty up to £3,000 plus daily penalties of up to £600 per day for continued non-compliance. The penalties came into force on 6 April 2015.

The provisions of either section 44(4) to (6) of ITEPA 2003, persons providing fraudulent documents, or section 46A of ITEPA 2003, anti-avoidance, may dictate that another party, other than the employment agency is to be treated as the employer of the workers for both tax and National Insurance Contributions (NICs) purposes.

If that party is a company which includes limited liability partnerships and it fails or defaults from paying to HMRC the relevant PAYE debt by the required due date, then HMRC may hold the directors of the company personally responsible for paying that PAYE debt, plus any specified interest.

In such instances, HMRC may serve a ‘Personal liability notice'.

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